KB Toys Files for Bankruptcy
KB Toys filed for chapter 11 bankruptcy protection this morning in the United States Bankruptcy Court, District of Delaware (read the KB Toys Bankruptcy Petition here). According to its affidavit in support of its bankruptcy motions, KB operates 277 shores in shopping malls, 40 stores in strip malls and 114 outlet stores (read the KB Affidavit in Support of bankruptcy motions here). KB lists its annual sales at $480 million.
KB previously filed for bankruptcy in 2004. During its 2004 bankruptcy, it reduced the number of stores from 1,200 to 650. I suspect you will see similar store-closings in this bankruptcy. Whether KB rejects store leases, or assumes the leases, landlords need to pay close attention to this bankruptcy. Attached is a link to a previous post I prepared titled "Ten Things Every Commercial Landlord Should Know About a Tenant in Bankruptcy." This link provides a brief summary of some of the issues landlords should consider when a commercial tenant such as KB files for bankruptcy.
